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UPDATE: Ferry operator floats return to Wellington-Lyttelton route

Thursday 1st November 2012

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Cook Strait ferry operators are unwilling to sign up to the idea of a new terminal south of Blenheim until they see the charges and one says running ferries again from Wellington to Lyttelton should be looked at.

The government is assembling a team led by Treasury and transport officials to further investigate building a $422 million inter-island road and rail freight port at Clifford Bay, Transport Minister Gerry Brownlee said on Thursday.

"Cabinet believes the business case we've been presented is strong enough to justify further testing the viability of this major change to New Zealand's transport infrastructure," Brownlee said in a statement.

KiwiRail chief executive Jim Quinn told BusinessDesk after the KiwiRail annual meeting last week that the Clifford Bay ferry terminal was a government decision.

"If a decision is made to build it they will come and talk to us. If it isn't commercial we won't be signing up. I don't mean that as a threat," Quinn said.

Strait Shipping managing director Sheryl Ellison was eager to understand the business case for the new terminal.

"Unlike out competitor, we have no idea of the basics such as indicative port fees and other costs, and as a result we're not able to determine whether or not it would be feasible for Strait Shipping to go to Clifford Bay," the operator of Bluebridge ferries, with 40 percent of the Cook Strait freight market, said.

Ellison asked if the government had looked at placing ferry facilities at Lyttelton Port, which serves Christchurch.

She said 75 percent of interisland freight went to Christchurch and beyond and the rail line down the coast to Christchurch was expensive to maintain.

"Facilities at Lyttelton Port are also an option worth investigating," she said.

Ferry services between Wellington and Lyttelton ended in 1976 after operating for more than 80 years. The end of the service was blamed on cheaper air travel, which reduced passenger demand.

Brownlee said that moving to Clifford Bay from the existing wharves at Picton could lead to larger ships plying the route, while cutting the journey time between Wellington and Christchurch by 80 minutes by ferry/road and 110 minutes by ferry/rail.

The government is considering making the project a private/public partnership, with companies including Morrison & Co-managed Public Infrastructure Partners Fund expressing interest.

Other potential benefits would be lower fuel costs, reduced carbon emissions and smaller maintenance costs for rail and ferries, Brownlee said.

"I have discussed today's news with some key stakeholders, including the Marlborough District Council, Port Marlborough, Strait Shipping, CentrePort and KiwiRail's Interislander to inform them of our decision to proceed to the next stage," Brownlee said.

"They understand that this decision could potentially rewrite the transport map for the country and the government is prepared to take the time required to make the right decision for New Zealand," he said.

The review team will include government officials and private sector experts with a deadline of reporting back to the government by the end of April 2013. No details of the business case were released, with Brownlee saying the report was commercially sensitive and would affect ongoing negotiations.

A Building Infrastructure report released on Thursday sets out 67 initiatives to help build a more competitive economy, Finance Minister Bill English said. Future reports in the series will focus on natural resources and capital markets.

Separately KiwiRail is under pressure to keep operating rail-capable ferries. It is considering using wagons with rubber wheels to load ferries so it doesn't have to buy expensive ferries with rail lines on decks.

New Zealand is one of the few places in the world that operates some rail-capable ferries. The ability to drive rail wagons on ferries effectively maintains a national rail network.

KiwiRail's Arahura and Aratere ferries are rail capable and the Kaitaki is not. In the long-term the 28-year-old Arahura needs to be replaced.

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